Does it make sense to speak of Russia as an “emerging donor”? At first glance — not really.

Russia is a member of the G8, and seems to relish being a “Great Power.”

Soviet Russia dispensed a lot of assistance to the South, but then drifted away from Africa for almost two decades.

Unlike Brasilia, Delhi, Beijing or Pretoria in the BRICS grouping, Moscow does not self-identify with the Global South.

Russian interest in the rising powers group seems mainly about gaining geostrategic leverage.

So why even ask if Russia is an emerging donor?

From the above, it seems barely an “emerging” power.”

A lot depends on the definition. Let’s look more closely — especially if one of the defining characteristics of the so-called “emerging donors” (BRICS) is the strategy of linking aid, trade and investment.

Russia’s Return

Whereas Soviet Russia had a long history of close ties with African states — stretching from Egypt to South Africa — Russian influence withered after the fall of the USSR. In contrast, China greatly increased its profile throughout the Continent starting in the 1990s, and has invested huge sums in Africa.

The United States and the European Union have also sought to maintain their sway over the Continent.

Russia’s return to Africa started in 2009 with a whirlwind tour by Russian President Dmitry Medvedev and a 400-person delegation to Egypt, Nigeria, Namibia and Angola, which included Russia’s corporate elite. Strategic discussion of trade, investment and security dominated throughout.

Medvedev described the initial visit as “friendly — but very pragmatic.”

Russia does not sound like a “Southern development partner” — like Brazil, China and India. The usual refrain about “South-South cooperation” does not permeate through Moscow’s rhetoric.

Russia sounds more like a Great Power returned.

While the emerging powers — notably China and Brazil — have been carving out important niches for themselves in the broader architecture of global development, and their interventions have been noticed by traditional donor governments and the major multilateral donors, particularly the World Bank — Russia has gone relatively unnoticed.

But if we look more closely, Russia’s growing ties in Africa bear striking resemblances to others in the BRICS emerging group.

What’s Going On

Based on the OECD-DAC’s “official development assistance” (ODA) classification, Russia’s foreign aid does not look particularly remarkable — peaking at US$785 million in 2009 and dropping markedly to US$472.32 million in 2010.

Based on the “ODA” classification, Russia’s aid budget is by far the smallest of the G8 club.

Reflecting the influence of the G7-DAC donors, much of this Russian foreign assistance is channelled through the global multilateral donor agencies, such as the World Bank.

However, Moscow also channels a lot of assistance to neighbouring countries, within its sphere of influence. These flows are beyond the ODA numbers, and are directed at propping up the prosperity of its neighbours, and other long-standing allies.

Indeed, this part of Russia’s aid looks a lot like Chinese assistance, where there are clear links between aid and investment. Not unlike China, Russian policy makers also prefer an approach where the ties between aid and investment in external development projects are not hidden, where there are commercial ties leading back to the “giving” country, and where large state-directed companies are involved in the delivery.

For example, Russian Railways — a state-owned firm — is currently negotiating a contract to source and build a 300 km railway in the Indonesian island Borneo. Other such projects dot the landscape of Russia’s Soviet- and post-Soviet-era allies. Interestingly, state companies such as Russian Railways enjoy the comparative advantage of being able to invest in places that are deemed “off limits” by Western governments, such as North Korea.

The Road Forward

In a recent column, President re-elect Vladimir Putin outlined the goals for Russia’s economic diplomacy moving forward: “Russia is still learning how to systematically and consistently promote its economic interests in the world. Russia is in need of broader, non-discriminatory access to foreign markets. So far Russian economic actors have been getting a raw deal abroad. Restrictive trade and political measures are being taken against them, and technical barriers are being erected that put them at a disadvantage compared with their competitors.”

Russia’s leadership is clearly thinking about how to reposition their country in the world economy.

In so doing, they are becoming increasingly aware of the utility of aid-related activities in fostering a friendlier commercial environment for Russian firms abroad — and how this was neglected previously.

As early as 2007, Russian authorities had issued a Report that stated that Russia needed to increase its foreign assistance activities in order to improve Russia’s image abroad.

Moscow now plans to spend roughly US$500 million each year for the coming years, starting in 2011. And Russia’s foreign policy establishment has been directed to publicize this foreign aid activity.

While the role of external assistance has yet to be outlined explicitly in Putin’s statements on Russia’s economic diplomacy, there are plenty of ways in which Russian aid can be expanded.

Where can we expect to see growth in Russia’s foreign assistance?

Russia’s foremost niche is regional. Moscow is the major source of development assistance to its low-income neighbours. The former Soviet Republics have received significant Russian technical advice, and support for infrastructure and healthcare.

Africa will also be key. A recent Policy Brief from the African Development Bank[2] notes that Russia’s trade ties with Africa are low compared to the fast-rising emerging economies. The low level of Russia’s African investment and trade profile is somewhat surprising when considering the limits of Russia’s domestic mineral reserves, where supplies appear to be headed for depletion in the next two decades (especially after 2025).

In other words, increased involvement in Africa may be one way for Russian natural resource companies to sustain or expand their world market share. Russian leaders have also noted that Russian companies such as Lukoil, Gazprom and Rosatom have substantial stakes in oil and natural gas exploration, but Russia sits behind leading G7 economies, and even more notably, fellow rising power China, in terms of holdings in Africa.

In order to strengthen its engagements with Africa, Russia will likely increase its bilateral assistance in the Continent. Moreover, we will likely see the continuation of a shift away from emphasizing its contributions to the established multilateral donor organizations, such as the World Bank, and toward a position that is closer to China’s — where primary emphasis is placed, unapologetically, on strong bilateral ties, and where state-directed investments play a key role.

To strengthen Russia’s capacity to manage the disbursement of its foreign aid, Russia’s finance ministry announced the government’s intention to create a separate department in 2012. The new department will oversee specialist training, equipment supplies and construction. Such an institutional innovation would strengthen Moscow’s ability to expand, steer and oversee its own foreign aid programming, and would also reduce the need to rely on global multilateral platforms.

The return of Vladimir Putin to the Russian presidency only increases the likelihood that Russia will strive boldly to achieve its new economic diplomacy goals.

Economic diplomacy and external assistance will be integral to how Russian government and business can “better coordinate their efforts in the foreign economic sphere, to aggressively promote the interests of Russian business and help open new markets.”[3]

It is in this sense that Russia’s emerging activities as a “donor” will be worth watching.

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